Medicare’s Incentive Payment (MIP) program provides a 10% bonus payment to providers who treat Medicare patients in areas where there is a federally designated shortage of generalist physicians. This study examined the experience of Alaska, Idaho, North Carolina, South Carolina, and Washington with the MIP program using a retrospective cohort design utilizing 1998 Medicare Part B data. Physician specialty was determined through American Medical Association Masterfile data. Rural status was determined by linking this ZIP code to its Rural-Urban Commuting Area Code (RUCA). There were 39,780 providers in the study cohort: 24.9% generalists, 53.5% medical and surgical specialists, and 21.6% nonphysician providers. Over $4 million in bonus payments were made to providers in the Health Professional Service Area (HPSA) sites, with a median overall payment of $173. Specialists and urban providers received 58% and 14% of the bonus reimbursements respectively. Nearly a third of the potential bonus payments ($2 million) were not distributed because the providers did not claim them. Over $2.8 million in bonus claims were distributed to providers who likely did not work in approved HPSA sites. Many providers who should have claimed the bonus did not, and many who likely did not qualify for the bonus claimed and received it. Consideration should be given to focusing and enlarging the bonus payments to specific providers as well as a system that prospectively determines provider eligibility. Funded by HRSA’s ORHP.